Macroeconomic Model Beyond Equilibrium

Abstract

This paper describes macroeconomics as multi-agent system alike to multi-particle system. Economic agents are treated as simple units of macroeconomics on economic space. Risk ratings of economic agents play role of their coordinates on economic space. Aggregates of economic variables of economic agents at point x define macroeconomic variables as functions f(t,x) of time t and coordinates x on economic space. Macroeconomic variables depend on economic and financial transactions between economic agents. Aggregates of transactions between economic agents at point x and y on economic space define economic fields F(x,y) as functions of two coordinates. Economic fields F(x,y) determine evolution of macroeconomic variables. To describe dynamics of economic fields on economic space we derive hydrodynamic-like equations. For simple models of interactions between economic fields we derive hydrodynamic-like equations in a closed form and obtain wave equations for their perturbations. Amplitudes of economic field waves on economic space can grow as exponent in time and can induce economic and financial crises. Diversity of macroeconomic and financial waves on economic space in simple models underlines importance of wave processes for modeling and forecasting.